NATIONAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A026800010036-5
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 20
• Document Creation Date: December 22, 2016
• Document Release Date: July 9, 2012
• Sequence Number: 36
• Publication Date: August 7, 1974
• Content Type: REPORT

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Top Secret
National Intelligence
Bulletin
Top Secret
7 August 1974
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N2 631
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National Intelligence Bulletin
August 7, 1974
CONTENTS
USSR-Cyrus: Soviets urging General Assembly considera-
tion of Cyprus issue. (Page 1)
LAOS: Communist deputy prime minister to head the coa-
lition government during Souvanna's absence. (Page 3)
ISRAEL: Israeli mobilization under way; some reservists
may be involved in West Bank maneuvers. (Page 4)
PORTUGAL-US: Lisbon reverses position, calls for Azores
base negotiations to begin. (Page 5)
PORTUGAL: Foreign Minister Soares discusses current at-
titude toward African provinces. (Page 6)
WEST GERMANY - MBFR: Bonn concerned about the introduc-
tion of nuclear weapons into MBFR. (Page 8)
ITALY: New selective price freeze unlikely to be more
successful than old price control program. (Page 9)
AUSTRALIA: Both houses of parliament meet in unprece-
dented joint session. (Page 10)
ETHIOPIA: Prime minister and military face showdown
over four cabinet appointments. (Page 11)
PAKISTAN-INDIA: Islamabad and New Delhi indicate a
willingness to resume negotiations. (Page 12)
ARGENTINA: Economic policy showdown delayed but not
averted. (Page 13)
URUGUAY: President's refusal to recall diplomats irks
mi li tary . (Page 14)
FOR THE RECORD: (Page 16)
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National Intelligence Bulletin August 7, 1974
USSR-CYPRUS
The Soviets are trying to encourage various non-
aligned states to call for a special General Assembly
session to deal with Cyprus.
This diplomatic activity is consistent with Moscow's
position that the future of Cyprus should be settled
within the UN framework--the only place the Soviets can
exert pressure. Soviet Ambassador Malik is serving this
month as president of the UN Security Council; Moscow
undoubtedly views this as a plus in dealing with the
Cyprus situation. Malik's veto last week of Secretary
General Waldheim's proposal for a new mandate for the
UN peace-keeping force on Cyprus was probably intended
to call attention to Moscow's desire to have a role in
determining the future of Cyprus.
In an effort to promote the UN forum, the Soviets
have attacked the tripartite peace conference in Geneva
and are trying to spread distrust of NATO's intentions
regarding the island. On August 4, Pravda said the
Geneva cease-fire declaration was meant to delay a polit-
ical settlement and to prolong the occupation of Cyprus.
Soviet Ambassador Minin, who was dispatched to Geneva
as an observer, told US diplomats he was perturbed that
the Geneva accord contained no guarantees for the future
sovereignty of Cyprus.
Moscow is concerned that the longer Turkish and
Greek troops remain on the island, the greater are the
prospects for partition. Moscow's diplomatic activity
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National Intelligence Bulletin August 7, 1974
is designed to forestall such a development and ensure
that any proposals for federation do not compromise
Cypriot sovereignty.
These concerns may be leading Moscow to ado t a
cooler attitude toward Ankara.
creasingly remote, they probably want to keep the issue
alive as long as they see Ma ios as an influential
spokesman against, partition.~
The USSR, meanwhile, has expressed cautious approval
of the new government in Athens. The Soviet ambassador
had his first official contact with the new government
on August 5 in a meeting with Foreign Minister Mavros,
and Pravda commended Athens for its positive attitude
towarca Cyprus settlement, The article took a sympa-
thetic view of Greek domestic developments, although it
did warn that a threat from the right remains.
The Soviets are soft-pedaling the issue of Makarios,
at least for the time being. While the Soviets may re-
alize that prospects for his return are becoming in-
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National Intelligence Bulletin
August 7, 1974
Lao Communist Deputy Prime Minister Phoumi Vongvichit
will apparently head the coalition government during Prime
Minister Souvanna' s. convalescence abroad.
Phoumi has, in fact, already begun to assert himself
as the senior member of the cabinet and to take over as
acting prime minister. Phoumi had taken the initiative
for the two cabinet meetings held since Souvanna became
ill on July 12. Although he shared the chair with the
lackluster Leuam, Phoumi clearly dominated both sessions.
There is growing apprehension among the non-Commu-
nists that Souvanna--who hopes to leave later this month
for several months recuperation in France--may never be
able to resume his duties. For the first time since the
Prime Minister was stricken, the non-Communists on August
5 seriously considered the problem of selecting a per-
manent successor.
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National Intelligence Bulletin
August 7, 1974
They generally agreed that their first choice should
be a political nobody from outside the coalition struc-
ture. Prince Khammao, the president of the King's Coun-
cil, emerged as the leading contender. The non-Communists'
second choice was Interior Minister Pheng Phongsavan.
He has long been a strong candidate for prime minister,
in part because his neutralist credentials have made him
generally acceptable to both sides.
As a possible third choice for prime minister, the
non-Communists surprisingly agreed that they could accept
Pathet Lao leader Prince Souphanouvong--if he would place
the nation above Communist objectives, and if he would
be acceptable to the US and other Western powers
ISRAEL
An Israeli mobilization exercise has been under way
since last week. Israeli press reports say that some re-
servists were called up last week and others early this
week. The exercise reportedly is to test a new system
for recalling the reserves in an emergency. The full
extent of the exercise and. the number of reservists in-
volved, however, are not known.
ons" for any new war.
Israelis claim to be taking precautions against such an
eventuality. The Jerusalem Post says that Tel Aviv plans
to recall "thousands" of reservists, particularly those
with technical qualifications, "to prepare Israel's weap-
Israeli military authorities have announced that a
large-scale military exercise involving airborne, armor,
and infantry forces. is taking place on the Israeli West
Bank. Other exercises involving naval and air units also
are in progress. Some of the recalled reservists probably
are participating in these maneuvers.
Both the call-up and the exercise come. at a time
when Israeli authorities are saying that a new round of
fighting could occur within the next 3 to 12 months. The
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National Intelligence Bulletin
PORTUGAL-US
August 7, 1974
The provisional government in Lisbon has reversed
its position that negotiations for the renewal of the
US base on the Azores be delayed until a permanent gov-
ernment is formed next year.
The Portuguese ambassador in Washington told State
Department officials this week that the current govern-
ment is suffering financially and needs the compensation
it hopes the US can provide in return for a five-year
extension of base rights. It was agreed that formal
talks would begin between ambassadors Themido and Mc-
Closkey on September 3.
In addition to rent payments, the general categories
of compensation Themido mentioned included military
equipment--particularly for the air force--assistance
loans, direct assistance to the population on the Azores,
educational aid, and grain. Themido returns to Lisbon
today for more detailed instructions.
During the negotiations, the Portuguese probably
will stress that more US assistance will be necessary
to help the political moderates now ruling Portugal to
consolidate their power. Themido set the stage for such
a pitch last week when he told Secretary Hartman that
Portuguese moderates need help soon to prevent a slide
to the left.
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National Intelligence Bulletin August 7, 1974
PORTUGAL
Foreign Minister Soares briefed chiefs of mission
from 20 Western governments on August 5 about the current
state-of play between Lisbon and its African provinces.
According to Soares, Lisbon is prepared to transfer
power to the rebel movement in Portuguese Guinea, but is
waiting to meet with the insurgents for a final round of
talks. Soares commented_ that Lisbon could recognize in-
dependence unilaterally, but this would suggest that the
Portuguese troops would withdraw immediately. He seems
to think that Portuguese forces would aid the rebels in
consolidating their position, while authority is being
transferred to the rebel-proclaimed government of Guinea-
Bissau. Lisbon is also ready to support admission of the
Republic of Guinea-Bissau to the UN.
Soares repeated Lisbon's position that the Cape
Verde Islands are a separate issue from Portuguese Guinea.
He stated that Lisbon wants the Cape Verdians to determine
their own future and cited UN resolutions that distinguish
between Cape Verde and Portuguese Guinea. He thought
that the island territories of Principe and Sao Tome,
located off the coast of Equatorial Guinea, should also
be allowed to determine their own future.
Soares believes that Mozambique is next in line for
independence. Lisbon hopes to form a coalition govern-
ment with the Front for the Liberation of Mozambique and
to hold elections for a constituent assembly in about a
year. There is no sign yet that the rebels will agree
to such a plan. In their brief meeting with Soares in
June, they refused to negotiate except on the basis of
a direct turnover of power.
Lisbon hopes the plan for independence in Mozambique
can be followed in Angola. However, Angola's situation
is complicated by the fact that there are three liberation
groups--none of which is dominant--with which to begin
negotiations. Lisbon claims to have contacted all three
and hopes to begin negotiations soon.
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National Intelligence Bulletin August 7, 1974
WEST GERMANY - MBFR
West German foreign office officials have once again
voiced concern about how the issue of nuclear and re-
lated weapons is to be introduced into the Vienna force
reduction negotiations.
The Bonn officials stressed that nuclear elements--
such as warheads, missiles, and aircraft--should not be
introduced as a package. Instead, each type of weapon
should be brought into the negotiations separately. The
officials also asserted that nuclear capabilities are
too important to be used merely to buy the USSR's agree-
ment to withdraw a Soviet tank army in the first phase
of the negotiations.
In the past., German officials have spoken of trying
to obtain Soviet, agreement to the Western "common ceil-
ing" concept--placing an upper limit on the ground
force manpower of the two sides in central Europe--in
return for nuclear reductions by the West. They also
proposed previously that the allies urge reciprocal
nuclear reductions or perhaps a freeze on the nuclear
weapons of each side in central Europe.
One of the officials suggested that the Soviets
might be more interested in an agreement giving them
some influence in future West European defense coopera-
tion than in an agreement on nuclear issues.
The Germans said that they hoped to have further
discussions with the US and the UK before the US makes a
final decision on the question of including nuclear ele-
ments in the force reduction negotiations. Although
British officials have not addressed the nuclear issue
within the last few weeks, they will probably agree
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National Intelligence Bulletin
August 7, 1974
The Rumor government has dropped controls on prices
of industrial goods but will continue a selective price
freeze. The new control program probably will be unable
to prevent a speedup of inflation. Because of rising
wages and increased prices for raw materials earlier this
year, costs to consumers will probably increase at an
annual rate of 25 percent during the rest of the year.
Prices of goods in 6even basic categories--including
bread, fresh beef and other imported meats, and edible
oils--will continue to be frozen. Rome and the provincial
authorities will also monitor a few other food items.
For almost all other products, the government will influ-
ence prices only through consultations with large dis-
tributors and cooperatives.
Although tailored to control items that figure prom-
inently in the calculation of the cost-of-living index,
the new program is unlikely to be any more successful
than the old one, which was much more broadly based. Pres-
sures to raise prices are still strong, and strict en-
forcement of price controls could lead to hoarding and
shortages.
The government's austerity program, now being revised
in parliament, probably holds more hope for restraining
inflation than does the price control program. By cutting
the Treasury deficit and reducing demand, the program
eventually should ease price pressures.
In the short-run, however, the austerity program
could add to price increases. The measures contain in-
direct tax increases, which add directly to the consumer
price index. In addition, the rise in prices will trig-
ger automatic wage adjustments, adding to production costs.
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National Intelligence Bulletin August 7, 1974
AUSTRALIA
The two houses of the Australian parliament, meeting
in an unprecedented joint session yesterday, passed three
of six bills that were rejected twice by the opposition-
controlled upper house in the last parliament. This is
what led Prime Minister Whitlam to call national elec-
tions last May.
Whitlam arranged for the joint session--provided
for under the constitution, but never used by a previous
Australian government--after the new Senate voted down
the bills a third time. His Labor Party has a majority
in the combined membership of both houses. One of the
three legislative acts, a bill on redistricting, would
be to Labor's advantage.
Three more bills will be considered today, two on
national health services and one on establishing a fed-
eral petroleum and minerals authority. They have been
pictured by the opposition as impinging on states rights.
The central government is anxious to control resource
policy and takes a harder line on foreign investment
than do the states.
of its actions. The court may invalidate one of the
bills on grounds that the government violated parlia-
Although the Whitlam government apparently will
achieve its immediate aim of enacting previously blocked
legislation, it faces a court challenge on the validity
mentary procedure in pushing it through.
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National Intelligence Bulletin August 7, 1974
The Armed Forces Coordinating Committee is said to
be pressing Prime Minister Mikael Imru to dismiss four
members of his new cabinet. The committee, which wants
to include the four in its roundup of officials charged
with corruption, seems prepared to put in military offi-
cers in place of Mikael and other civilians if Mikael
does not comply.
Some members of the cabinet consider that, in appoint-
ing these controversial figures, Mikael ignored the power
of the Coordinating Committee and fear that he may soon
be forced from office. Mikael accepted the committee's
nominees for the defense and interior ministries, but he
apparently believed he could override opposition to the
other four.
Over 100 former officials are now under arrest.
These include many of Ethiopia's most prominent aristo-
crats, and some people close to the Emperor. The most
recent list of persons to be arrested, announced last
weekend, includes the Emperor's private secretary and
26 judges.
Unlike earlier lists, this one includes low-level
bureaucrats. If arrests of lower ranking officials con-
tinue, the effectiveness of the government will slip even
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National Intelligence Bulletin August 7, 1974
PAKISTAN-INDIA
Talks between Islamabad and New Delhi, broken off
by Prime Minister Bhutto in mid-May following India's
nuclear test, may be resumed soon. The talks would be
directed at restoring communications, transportation
links, and other ties broken by the 1971 war.
No date has been proposed for the talks, but
recent statements by Pakistani and Indian leaders indi-
cate a willingness to meet in the near future. Pakistan's
about-face on talks apparently stems from the belief
that the maximum amount of propaganda has been squeezed
from the nuclear test. Leaders in both countries are
preparing their people for a resumption of negotiations
by underscoring the benefits that will be generated by
normalization of relations on the subcontinent.
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Rapid progress in negotiations should not be ex-
pected, however. Pakistan and India still have widely
differing views on the pace and substance of the talks,
and suspicions remain deeply ingrained. Pakistan wants
to resolve all outstanding issues between the two coun-
tries as quickly as possible. India favors a slower
course, beginning with the re-establishment of communica-
tions and transportation links, before moving on to
diplomatic relations. New Delhi has also proposed that
no preconditions be set before the meetings begin.
Developments in the Indian state of Kashmir could
torpedo the negotiations before anything is accomplished.
The Indians are currently negotiating with long-time
Kashmiri leader Sheikh Abdullah for a new constitutional
relationship between the state and the central government
in New Delhi. Bhutto would react strongly to any change
in the status of predominantly Muslim Kashmir, because
of the very negative reaction that would be generated in
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National Intelligence Bulletin
ARGENTINA
August 7, 1974
A showdown within Mrs. Peron's government over eco-
nomic policy has been delayed but not averted.
In a speech yesterday, the President made no men-
tion of reports that Economy Minister Gelbard's resigna-
tion was imminent, and her brief statement was restricted
to a call for public vigilance against "speculators" and
a plan for neighborhood committees to investigate short-
ages.
After the President's broadcast, Gelbard denied
press reports that he was planning to resign because of
policy disputes with the head of the Central Bank. A
serious confrontation, however, is unavoidable because
both advisers have staked their reputations on diametri-
cally opposed stands.
Last week, Central Bank President Gomez Morales
publicly denounced business demands for easy credits to
finance recent wage bonuses and characterized current
price policy as a "crisis." The extra bonuses, amount-
ing to one half of an employee's monthly salary, are
normally given in July and December. This year, however,
both bonuses were granted in July to quiet growing labor
unrest over consumer shortages. Business leaders, on the
other hand, requested easy credit to finance the advances
because continued price controls prevent passing on the
cost through price hikes. Many firms thus face a seri-
ous liquidity problem, due to strains on cash reserves
triggered by the continuing profit crunch and high wage
bills.
Morales' opposition to easy credit is based on his
growing concern over continued rapid monetary expansion,
which boosted Argentina's money supply more than 75 per-
cent during the 12 months ending on June 30. Rapid mone
tary expansion has been a major factor in the excess
consumer demand and resulting shortages during the past
year. Morales' stance places him in direct opposition
to the Peronist business confederation and its former
president--Economy Minister Gelbard.
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National Intelligence Bulletin August 7, 1974
The Gelbard-Morales rivalry is long-standing, as is
the animosity between Gelbard and presidential secretary
Lopez Rega. Lopez Rega's recent alliance with Lorenzo
Miguel--the most influential leader of the Peronist labor
movement--makes further wage hikes and continued price
controls almost inevitable. Since Morales lacks a suf-
ficient political base to take on Peronist business by
himself, the unfolding power struggle may include an
alliance with Lopez Rega. If this is the case Gelbard's
days in office n1a be numbered.
URUGUAY
President Bordaberry's refusal to accept military
demands for the recall of some 90 Uruguayan diplomats,
including former president Jorge Pacheco, sets up another
potential showdown between the President and the armed
forces. Pacheco has been the target of a recent military
investigation into smuggling and corruption, and Borda-
berry, believing that some military leaders are deter-
mined to take action against the former president, says
he will not authorize the recall as long as Pacheco's
name is on the last. Bordaberry's enemies in the armed
forces have accused him of protecting corrupt friends,
and some favor replacing the President eventually with a
military man. Unless military leaders have firm evidence
against Pacheco, howeverii, the ma 117 not force a crisis
on this issue
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National Intelligence Bulletin August 7, 1974
FOR THE RECORD
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Israel-Lebanon: Israeli air force planes struck
Palestinian guerrilla targets in southern Lebanon early
this morning. The raid apparently was prompted by the
kidnaping yesterday of several Arab laborers by Arab
infiltrators. During that incident, several Israeli
halftracks crossed the border, and Lebanese and Israeli
forces exchanged artillery and mortar fire. There has
been no report of casualties during the exchange.
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Top Secret
Top Secret
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